RBS will cave in to investor pay demands
ROYAL Bank of Scotland (RBS) will toughen up its criteria for remunerating its top executives this week after a backlash from shareholders.
The state-run bank has come in for fierce criticism for setting the bar too low for lucrative performance-related incentive packages to come into play.
Now the bank will capitulate by putting the structure of its bonus scheme to a shareholder vote at its annual meeting on Wednesday. It is understood details of a new system, if it is adopted, will not be decided until after the company’s trading statement, which is expected on 7 May.
The contention arose over a trigger point for the bank’s long-term incentive plan, which it had planned to set at 50p a share. This is well below the 55.8p recorded at the close of trading last week. The absolute share price incentive scheme was implemented last February to run for three years.
It was set after a consultation with various industry figures including Sir David Walker, who last year conducted a review of the corporate governance of banks, and representatives of the G20 committee.
An RBS spokesman said: “An extensive consultation has been undertaken and the remuneration committee (remco) will give close consideration to the range of shareholder views before reaching a final position.
“The share price has been hugely volatile in the last year and that needs to be taken account of in a way that ensures the scheme is both motivating and exacting in performance terms. This is the board’s intent and remco will endeavour to align all interests in the matter.”
RBS boss Stephen Hester, who forewent his bonus this year, was in line top up his £1.2m salary with up to £4.8m a year in shares.